Currently the individual inheritance tax (IHT) allowance is £325,000.
There is no inheritance tax payable between married couples or civil partners. Therefore a maximum allowance of £650,000 (£325,000 x2) can be achieved on second passing. This does not apply to divorcees or unmarried couples.
If your estate value exceeds the allowances then everything over the nil band threshold is taxable at the eye watering rate of 40%.
That said however, in a bid to take most family homes out of inheritance tax bracket Chancellor George Osborne announced in his Summer Budget that he would significantly raise the IHT threshold from £325,000 per person to £500,000. This means that from 2020, married couples and civil partners will be able to pass on up to £1 million of housing wealth to their children or grandchildren without paying any IHT at all….! Read our blog post about the proposed changes here.
Inheritance tax is a complicated issue so it is wise to seek professional help and guidance. Please contact us for more information in Inheritance Tax planning.